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Create Standard Work for Flow Easily with Operational Excellence
Continuous Improvement with Operational Excellence
Operational Excellence
Systematic management of all the processes to achieve world class performance by:
Efficient utilization of toolsOptimization of ResourcesElimination of process waste / inefficiencies
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g
Lack of operational Excellence …
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Results inlow profitability and cashflow issues
When do you address it?
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Operational Excellence Becomes a Concern when…
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Cash flow starts to get a little tight– Trouble meeting payroll– Suppliers are screaming for payments– Inventory is out of control– Expenses are rising faster than revenue
Backlog starts to shrinkOpportunities are missed due to cash
flow issueswww.opexsociety.org
Improving Profitability – Traditional Approach CFO/Department Head is responsible
to leadthe cost cutting effortsFocus usually is on cutting expenses
Workforce Reduction
Scrutinize Purchasing
Reduce
Employee PerksExtend
Payment Terms
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Performance Improvement: Strategic Approach
measure the current level of performance
identify waste Generate Ideas to achieve a better level of output
Performance improvement is all aboutorganizational change
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Ideas Should be…
• Effective• Efficient, and• Adhere to
Market Forces
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How to Generate The IdeasValue Stream Mapping
Value Stream Mapping is a Lean technique used to analyze the flow of materials and information currently required to bring a product or service to a consumer.
Lean: A business system for organizing and managing product development, operations, suppliers, and customer relations to create precise customer value—goods and services with higher quality and fewer defects—with less human effort, less space, less capital, and less time than the traditional system of mass production.
Visualize Your
Processes
Eliminate
Waste
$Increase Profits
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Purpose of Value Stream Mapping
Identify processes where “Lean” techniques can be applied
Help reduce / eliminate wait time Eliminate process waste Reduce production cycle and processing
time Understand process linkages and
dependencies Create the basis for “Lean”
implementation planLet Your Organization Be at Competitive World for
Longwww.opexsociety.org
Value Stream Mapping – Case
Study
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Business Case
Solution
Improve lead time performance by synchronizing production with customer demand.
Key Requirements1. Reduce flow time to meet
customer demand.2. Reduce RAW, WIP and FGI levels.
Problem Statement
Losing Business to competitors due tolong lead times and late deliveries.
Measurements
1. Total flow time2. Inventory levels3. EBIT performance.
Ideal State
• On-Demand• Defect Free• 1-By-1• Lowest Cost
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Value Stream Map – Current Process
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Team Brain Storming Session
• Can Customer increase the size of the blanket order and provide us with a longer term forecast visibility?
• Can we flow the demand down to the supplier with a longer term visibility?
• How can we reduce wait time?• How can we reduce change over time?• Can we reduce lot size?• Can we merge production processes to
reduce travel time?Let Your Organization Be at Competitive World for
Longwww.opexsociety.org
Value Stream Map- Future Process
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Do
Act
Plan
Check
• People
• Product
• Systems
• Processes
Strategy Implementation Check List
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Next Step
• How would you apply Value Stream Mapping into yourBusiness?
1. Share the business challenge with your key staff.2. Define business case3. Define a high level business process4. Define activities for each business process including
wait time.5. Randomly pick a minimum of 5 current jobs and record
all activities and time. From the initial customer call to receipt of payment for the goods or services.
6. Map the process – this is your current value stream map7. Categorize each activity as value added or non value
added8. Define a map eliminating as many of the non value
addedactivities – now you have a first draft of the future state
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Next Step
Identify Initiative• Does your
product offer exceptional Buyer utility?
• Use Buyer Utility Map
Strategic Pricing• Set the price
which is easily accessible to mass of buyers
• Use PricingCorridor Tool
Align Operations• Set Target
Profit• Come up
withTarget Cost• Streamline
Cost Innovation
Adoption• Create a
consensus• Address
adoption hurdles in actualizing the strategy
• Balance Scorecard
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